Industry and Strategy Analysis of Starbucks

Industry and Strategy Analysis
Porters five forces are an effective tool to assess the attractiveness of an industry, thus an indicator of future profits. Here is an analysis of the coffee shop industry.
Power of buyers There is no, or very limited switching cost for customers, and there is an abundance of other substituting products that the ones offered by Starbucks. Even though this is a threatening fact for Starbucks business, this is what makes them unique buy offering the "Starbucks experience". This have shaped their success. However coffees addictive nature can also result in less rational decision which can overrule the need for a "Starbucks experience". Taking the arguments above into consideration, the buyers power is considered high.
The threat of substitute products and services for Starbucks is substantial. Specifically, substitutes for Starbucks Coffee might include drinks like tea, juices, soft drinks, water and energy drinks, whereas pubs and bars can be highlighted as substitute places for customers to meet someone and spend their times outside home and work environments. However, Coffee is an important part of many people's lives and habits why coffee might be considered to be hard to substitute. Also Starbucks has shown their strengths in innovating related products why they are able to cover most related products in their product portfolio. Consequently, the threat of substitutes are considered moderately low.
Suppliers power are considered relatively low. This is due to the fact that Starbucks might be a very important costumer to each of them. At the same time, Starbucks has a large numbers of suppliers around the world why cutting in suppliers probably would be an easy task. The price on commodities are usually almost fixed and changes manly because of supply issues like "bad or good seasons". This also makes the suppliers less…...

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Business Strategy |
Assignement |
24/05/2010 |
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“Making your organisation fit for purpose”
Starbucks Coffe Company is the world leading brand in roasting and distributing coffee. The company owns now more than 15 000 coffee shops around the globe: it is settled in North America, Latin America, Europe, Middle-East and Asia. The diversity and depth of its offer (from smooth to extra roasted coffee, African, Arabian or Latin, and all the muffins, cookies and sandwiches) allow them to count on an international exposure that has last for many years.
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By: Nithin Geereddy (ID: 80842082)
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Starbucks Corporation, an American company founded in 1971 in Seattle, WA, is a premier roaster, marketer and retailer of specialty coffee around world. Starbucks has about 182,000 employees across 19,767 company operated & licensed stores in 62 countries. Their product mix includes roasted and handcrafted highquality/premium priced coffees, tea, a variety of fresh food items and other beverages. They also sell a variety of coffee and tea products and license their trademarks through other channels such as licensed stores, grocery and national foodservice accounts.1 Starbucks also markets its products mix with other brand names within its portfolio of companies, which include Teavana, Tazo, Seattle’s Best Coffee, Starbucks VIA, Starbucks Refreshers, Evolution Fresh, La Boulange and Verismo. Starbucks had total revenue of $14.89 billion as of September 29th, 2013.2
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Abstract
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Threat of substitute products – medium
The premium foods and even fast foods industry, there are substitute products for Starbucks. When the other industries can satisfy the customer need that Tea industry is satisfying then there will have a threat for Starbucks. Other beverage industries such as premium foods industry – Minute maid, Ice Lemon tea, pocari sweat, etc.
Threat of the entry of the new competitors – high
Fortune ranked Starbucks number one in innovation, quality of management, people management and also quality of products or services in the food industry 2007. Starbucks is still the world and Shanghai leader in its industry. Starbucks is constantly innovating and showing strong product differentiation in their industry. However, some competitors such as Mc Café introduced by Mc Donald’s, Mc Café offers premium coffee with reasonable price. Although Starbucks now is the strongest in its industry however must be aware of the threats to potential entrants since the profit is attractiveness.
The intensity of competitive rivalry – medium
Starbucks current Shanghai competitors are Coffee Bean & Tea Leaf, Costa Café, local and brand competitor rabbit (rbt). Because of this industry do not have too much rival in Shanghai; Starbucks comes as the winner of all them. With holding 73% of market share and 1000+ number of shop in china, they lead this industry.
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MGMT 4P90: Strategic Management |
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Submitted by: |
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Tania RahmanVijay Bhullar |
Presented to: Professor Peter Yannopoulos, PH.DMarch 28th, 2012 |
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Michael Porter uses the 5 forces model to analyze the industry environment. His ideas on competitive strategy are the most pervasive analytical tool used in strategic management (Henry, 2011). The five forces is used to capture the variation of competition, to determine whether a firm outside an industry should enter the industry, to see barriers to entry, to determine attractiveness of firm and to determine where the organization stands in relation to their industry. These five forces also help increase awareness of a trend towards suppliers and buyers bargaining power as well. Unlike SWOT analysis which is company specific explained in the next portion of this project, Porter’s five forces framework is industry focused. Furthermore, the five variables in the porter analysis are the industry suppliers, buyers, potential new entrants, substitute products and competition among existing firms. This section provides a thorough examination of the five forces affecting Starbucks’ coffee industry environment.
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...Table of Contents
Introduction: 2
Macro-Environment Business Strategy Gap Analysis 8
Industry Environment Business Strategy Gap Analysis 9
Strategy-Capability Gap 9
1. Macro-Environment Analysis 16
2. Industry Analysis 22
2.1 Threat of New Entrants 22
2.2 Bargaining Power of Suppliers 24
2.3 Bargaining Power of Buyers/Customers 25
2.4 Power of Substitutes 26
2.5 Intensity of Industry Rivalry 27
3. Internal Analysis Appendix 29
Introduction:
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